Sale-leaseback

Selling an asset, usually property, and leasing it back. The company releases cash while keeping use of the asset, but takes on lease obligations in place of ownership.

Where you will meet it

Sale-leaseback appears in 2 learning outcomes on the CFA syllabus. A few of them:

• Set out the kinds of corporate restructuring and why issuers undertake them
  CFA Level II · Corporate Finance

  “Restructuring actions reshape it without changing its scope much: cost programmes, balance sheet changes such as leveraged recapitalisations or sale-leasebacks, and reorganisation under creditor protection.”

• Assess restructurings aimed at costs or at the balance sheet
  CFA Level II · Corporate Finance

  “Balance sheet restructurings change financing: leveraged recapitalisations add debt to buy back shares, which may lower WACC through the tax shield while raising financial risk; sale-leasebacks release cash from assets but create lease obligations.”

Practise it

• Today's practice question One question, with every wrong option explained.
• Free Level I diagnostic test Twelve questions that show which topics to start with.
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All terms beginning with S · Glossary